IBM ups 2010 forecast, but 2Q rev falls short

By JORDAN ROBERTSON, AP Technology Writer
| 2:07 p.m.July 19, 2010

FILE - In this file photo made Jan. 11, 2010, a sign for IBM is shown in New York. International Business Machines Corp. is expected to release second-quarter financial results Monday, July 19, 2010, after the market close. (AP Photo/Mark Lennihan, file)
— AP

FILE - In this file photo made Jan. 11, 2010, a sign for IBM is shown in New York. International Business Machines Corp. is expected to release second-quarter financial results Monday, July 19, 2010, after the market close. (AP Photo/Mark Lennihan, file)
/ AP

FILE - In this July 9, 2010 file photograph, Chairman of the Board and CEO of IBM, Samuel J. Palmisano speaks at the annual meeting of the National Governors Association, in Boston. International Business Machines Corp. will announce second-quarter financial results Monday, July 19, 2010, after the market close,(AP Photo/Michael Dwyer, file)— AP

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FILE - In this July 9, 2010 file photograph, Chairman of the Board and CEO of IBM, Samuel J. Palmisano speaks at the annual meeting of the National Governors Association, in Boston. International Business Machines Corp. will announce second-quarter financial results Monday, July 19, 2010, after the market close,(AP Photo/Michael Dwyer, file)
/ AP

IBM reported after the market closed that its net income jumped 9 percent to $3.39 billion, or $2.65 per share, in the period that ended June 30, topping analyst projections for $2.58 per share. A year ago, IBM earned $3.10 billion, or $2.34 per share.

Revenue in the latest period rose 2 percent to $23.7 billion, from $23.3 billion. That was below the $24.2 billion that analysts expected. IBM said currency changes hurt revenue by $500 million in the quarter.

The company also reported a 12 percent decline in the value of services contracts signed during the quarter, to $12.3 billion.

IBM raised its 2010 net income guidance to at least $11.25 per share, an increase of a nickel per share. Yet even the boost might not be enough to please investors, as IBM consistently raises its guidance.

Investors are nursing fresh worries about the economy amid signs of sluggishness in the U.S. economy's improvement and fears about the euro and the ability of the governments of Greece, Portugal and Spain figure to repay perilously high debts.

IBM gets most of its revenue from outside the U.S., so strength in the dollar has hurt the company, since deals done in other currencies have translated into fewer greenbacks.

The economic worries have influenced Wall Street's reaction to the latest numbers from other technology heavyweights.

Last week Intel Corp. delivered its strongest quarter in the company's four-decade history, helped by surging demand for microprocessors for computer servers. The shares have barely budged.

Google Inc.'s results leaped on momentum in Internet search advertising, and the company's hiring has accelerated. Google's stock has fallen, in part because of concerns about the weaker euro's effect on Google and the costs connected with hiring new workers.

Shares of IBM, which is based in Armonk, N.Y., fell $4.68, or 3.6 percent, to $125.60 in extended trading. Earlier, it rose 1.4 percent, or $1.76, to close the regular trading session at $129.79.